Foreign investors will be able to claim a full stake in businesses established in the Khalifa Industrial Zone, an the effort by Abu Dhabi Ports Company to lure firms that will help the emirate achieve its objectives.
Capital free zone to allow investors 100% ownership
Abu Dhabi Ports Company (ADPC) has received approval to create the first industrial free zone in the capital with 100 per cent ownership available to foreign investors.
The Khalifa Industrial Zone Abu Dhabi (KIZAD), which is in Taweelah near the border with Dubai, joins a small but growing list of free zones in the capital as the Government seeks to spur foreign investment and diversify the economy.
The industrial zone, which was known as the Khalifa Port and Industrial Zone until its renaming yesterday, received approval for free-zone status from the Abu Dhabi Executive Council on Thursday. However, the ADPC said it would operate the zone with a dual structure and offer ownership to foreign companies only in cases where proposed projects benefited Abu Dhabi's strategic economic objectives.
This includes capital and energy-intensive industries, such as metals, petrochemicals and pharmaceuticals, that were identified in the emirate's 2030 development plan.
"In some industries, foreign investors will be granted 100 per cent foreign ownership," said Dr Sultan al Jaber, the chairman of the ADPC.
The infrastructure project is the largest in Abu Dhabi, and its first phase is expected to open in late 2012 with an offshore port four times larger than the current Mina Zayed on Abu Dhabi Island, as well as a 51 square km industrial zone costing Dh26.5 billion (US$7.21bn). By 2030, KIZAD should have created 150,000 jobs and be contributing 15 per cent of the emirate's non-oil GDP, according to plans.
In an effort to spur foreign investment, free zones have been widely adopted in other emirates, particularly in Dubai, which has 36 of them. Nationwide, foreign investment in free zones has reached Dh268bn, the second highest in the Arab world, data from the UN show.
Until recently, however, Abu Dhabi took a more cautious approach. KIZAD joins a small group of Abu Dhabi free-zone projects including the twofour54 media free zone and a logistics area being planned around Abu Dhabi International Airport.
"As 100 per cent foreign ownership is offered in Abu Dhabi, this will be another factor drawing in foreign investment, in addition to [the emirate's] focus on energy-intensive industries, and world-class transport and logistics," said Simon Williams, the chief economist for HSBC in the MENA region.
While many industrial zones and ports already operate in Dubai, Abu Dhabi and the Northern Emirates, KIZAD is seeking to distinguish itself with a focus on zones dedicated to single industries, with upstream, mid-stream and downstream companies within particular industries located together.
The aluminium zone, for example, will feature the EMAL smelter located next to rolling mills and extrusion operations. It is to include a "hot metal road" to transport molten aluminium from EMAL to nearby factories.
ADPC has reported strong interest from other industries including glass, paper, petrochemicals, metals and food and would announce deals as they were signed.
Tony Douglas, the chief executive of ADPC, said the ports company had received inquiries from companies in all of its targeted industrial sectors.
"We have a high-class problem," he said. "We have a lot more interest at this early stage than we thought we would."
Masdar, the Abu Dhabi Government's clean energy company, was expected to become the anchor tenant for a 3 sq km "clean tech" zone at the former Khalifa Port and Industrial Zone with plans for a solar panel plant, but that project's status is uncertain. Yesterday, Dr al Jaber, who is also the chief executive of Masdar, declined to comment.
In addition, a planned ChemaWEyaat chemicals complex, an investment worth up to $20bn, was expected to serve as an anchor tenant but will now be built near Ruwais in the Western Region, in a move to be closer to its main energy feedstock.